The Securities and Exchange Commission (the “SEC”) announced a whistleblower award of more than $27 million, representing the largest SEC whistleblower award of 2020. This is the sixth largest award overall since the inception of the SEC whistleblower program in 2011.
Congress established the whistleblower program to incentivize whistleblowers to report specific, timely, and credible information about federal securities laws violations to the SEC. Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) entitled “Securities Whistleblower Incentives and Protection,” requires the SEC to pay awards to whistleblowers who provide the SEC with original information about violations of the federal securities laws. See The Exchange Act at § 240.21F-1. The award is subject to certain limitations and conditions and the SEC has discretion to increase or decrease the award percentage based on a number of factors in relation to the unique facts and circumstances of each case. Id. at §§ 240.21F-1, F-6. The award can range from 10% to 30% of the monetary sanctions the SEC and other authorities are able to collect. Id. at §§ 240.21F-6.
According to the SEC’s Order Determining Whistleblower Award Claim issued on April 16, 2020 (https://www.sec.gov/rules/other/2020/34-88658.pdf), in determining the award percentage resulting in the award of over $27 million, the SEC determined the whistleblower:
- provided significant information that allowed the SEC to uncover hidden conduct, in part, occurring overseas;
- provided ongoing assistance and cooperation, including providing documents and investigative leads that advanced the investigation and saved the SEC significant time and resources;
- provided information that enabled the SEC to bring an action addressing misconduct that furthered the SEC’s law enforcement interests; and
- repeatedly and strenuously raised concerns internally.
The SEC determined that it did not need to reduce the award amount for unreasonable reporting delay because the whistleblower “repeatedly and tenaciously objected to and escalated” concerns about misconduct within the whistleblower’s organization.
Since the first award was issued to a whistleblower in 2012, the whistleblower program has awarded approximately $425 million to 79 individuals. The largest award—$50 million—was awarded to a whistleblower on March 19, 2018.